Article 20 | Taxation of Students | OECD Model Tax Convention


Junaid, like every other person from a developing nation, has a ‘Big America’ dream. Looking at his tenacity, his employers have sponsored his education and maintenance at Harvard University. He continues to receive the fees and living expenses from his employer in Brazil. Junaid is worried about high-income tax rates in the USA? Will this dissuade him from continuing his education? How do other Junaids who come to America with big dreamy eyes, bear the brunt of tax and continue their education?

Article 20 | Taxation of Students

Article 20 of the OECD Model Tax Convention, helps people like Junaid by not taxing the income or the payment received by them from other States for their maintenance, education, or training.

What does Article 20 say?

Article 20 provides non-taxation of payment if the following conditions are satisfied:

  1. The recipient is a student or business trainee/apprentice
  2. Is a resident of another State
  3. Has arrived into the State of receipt solely for studies or training
  4. Payment is from sources outside the State of receipt.
Article 20 | OECD Model Tax Convention | Taxation of Students Income.

Article 20 deals with only the payments received for the recipient’s maintenance, education, or training. It does not cover the revenues taxable under Article 15 or Article 7. Also, the payment for support should not exceed the level of expenses that are likely to be incurred to ensure the recipients’ education, training, or maintenance.


Veronica is a citizen of Paraguay. Here employer has enrolled her for certification at Cambridge University, UK. For getting qualified, she has to undertake an internship at BigPharma, London, for three months. During this period, BigPharma pays her 500£, and her employer pays her 1000$ per month for maintenance. Assuming Paraguay and the UK have adopted OECD Model Tax Convention, will the Queen and tax authorities of the UK, tax entire income?

As per Article 20 of the OECD Model Tax Convention, 1000$ received per month will not be taxable in the UK.

The Article exclusive covers the payments received from another State only. Hence the amount received by BigPharma will be taxable under the UK Tax laws under Article 15.

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